Dramatic evolutionary transitions in morphology are often assumed to be adaptive in a new habitat. However, these assumptions are rarely tested because such tests require intermediate forms, which are often extinct. In vertebrates, the evolution of an elongate, limbless body is generally hypothesized to facilitate locomotion in fossorial and/or cluttered habitats. However, these hypotheses remain untested because few studies examine the locomotion of species ranging in body form from tetrapod to snake-like. Here, we address these functional hypotheses by testing whether trade-offs exist between locomotion in surface, fossorial and cluttered habitats in Australian lizards, which include multiple intermediate forms. We found that snake-like species penetrated sand substrates faster than more lizard-like species, representing the first direct support of the adaptation to fossoriality hypothesis. By contrast, body form did not affect surface locomotion or locomotion through cluttered leaf litter. Furthermore, all species with hindlimbs used them during both fossorial and surface locomotion. We found no evidence of a trade-off between fossorial and surface locomotion. This may be either because employed kinematic strategies that took advantage of both axial- and limb-based propulsion. This may have led to the differential occupation of their habitat, facilitating diversification of intermediate forms.